Scottish Forum at the Global Water Stewardship Forum

The Scottish Forum on Natural Capital hosted a break-out session today (2 November) at theAlliance for Water Stewardship's Global Water Stewardship Forum held in Edinburgh. The "Water's in a Dram" session was designed to help delegates understand the importance of natural capital in achieving good water stewardship.

Chair of the Scottish Forum on Natural Capital and Chief Executive of the Scottish Wildlife Trust, Jonny Hughes, chaired the session, you can read his opening speech below. The session involved speakers from the Scotch Whisky Association and the James Hutton Institute.

Head of Sustainability and Innovation at the Scotch Whisky Association, Morag Garden spoke about how the industry is responding to the understanding of water as a key part of the natural capital on which their operations depend.

Enhancing Crop Productivity and Utilisation Research Theme Leader at the James Hutton Institute, Derek Stewart spoke about the hidden dependency on water through business supply chains. using the example of barley's in the Whisky industry. His talk also highlighted the role of biodiversity with the example of the importance of barley varieties able to adapt to changing water availability arising from Climate Change.

Read the transcript of the session's opening speech by Jonny Hughes, Chair of the Scottish Forum on Natural Capital:

Because we’re in Scotland, and we’re talking water, we thought it would be appropriate to theme this session around the water of life, whisky.

This was the theme of our What’s in a Dram infographic we created to help those new to the concept of natural capital grasp what the concept is all about.

The aim of the session is to explore how looking at water stewardship through the lens of natural capital might help us achieve better outcomes in terms of water quality, water flows, water security and water productivity. Through, the example of Scotland’s whisky industry, we’ll look at the utility of natural capital analysis in helping businesses make better decisions for their long term profitability and more widely for the environment and society.

I imagine there is a range of experience and understanding in the room so let me start off with the definition of natural capital. Natural Capital can be defined as the stocks of natural assets which include geology, soil, air, all living things and of course water. It is from these natural capital assets that we derive a range of flows, sometimes called ecosystem goods and services.

The most obvious ecosystem services include the food we eat, plant materials we use for fuel, building materials, medicines and the water we drink, wash with and use in all kinds of industry. There are also many less visible ecosystem services such as the climate regulation and natural flood defences provided by forests, the billions of tonnes of carbon stored by peatlands, or the pollination of crops by insects. Even less visible are cultural ecosystem services such as the inspiration we take from wildlife and the natural environment.

Natural capital assets, just like financial assets can depreciate if poorly managed. Just as we’ve experienced financial debt bubbles which have burst on the world several times in the past century – we are currently experiencing natural capital debt bubbles in many parts of the world. These debt bubbles are often linked to poor stewardship of water. Today, nearly 700 million people around the world lack basic access to water, and 2.4 billion lack access to sanitation. And yet the bubble is growing – currently, water scarcity affects around 40 percent of people in the world, a proportion set to reach two-thirds by 2050 according to FAO and the World Water Council.

What we need is to move to a point – and quickly - where we are living off the interest of our natural capital assets – not digging into and slowly depleting the stocks on which our livelihoods depend. In the case of water, it’s not just livelihoods, it’s actually lives themselves. No surprise then that there is a growing international interest in natural capital accounting as a tool for helping us move towards a new model of natural asset stewardship.

Since the 2012 United Nations Sustainable Development Conference (Rio +20), 70 countries have supported a communication calling on governments, the UN system, international financial institutions and other international organizations to strengthen the implementation of natural capital accounting.

Currently more than 30 countries have begun to implement the UN’s SEEA (System of Environmental and Economic Accounts), including the UK through the Office for National Statistics. The SEEA is, and I quote, “a system for organizing statistical data for the derivation of coherent indicators and descriptive statistics to monitor the interactions between the economy and the environment and the state of the environment to better inform decision-making.” For those of you working in the public sector, this is the key way for understanding natural capital at the national scale and water has been identified as a priority area for implementation of accounts.

To help catalyse this growing momentum the Scottish Wildlife Trust founded the World Forum on Natural Capital here in Edinburgh. In 2013 the event brought together some 500 people from 35 countries, in 2015 this rose to 600 delegates from 45 countries – a clear demonstration the growing interest among leaders from businesses, governments, researchers and NGOs.

At the 2015 World Forum saw the launch of the Natural Capital Protocol consultation, the piloting of which involved 50 companies including Coca Cola, Dow, Nestle and H&M. Following the consultation the Protocol was launched in July. The Protocol is a framework designed to help generate trusted, credible, and actionable information for business managers to inform decisions. The Protocol can be applied at a product, site, or whole business level and is applicable anywhere in the world.

The Protocol, in the context of water stewardship, can help to show whether water is a material consideration for your operations and help make decisions based on this such as whether to apply the Water Stewardship Standard. Quantifying the impacts and dependencies on water can help to inform investment decisions and make the case to decision makers from across business functions.

Natural capital is also being taken increasingly seriously by the world of finance. The Natural Capital Finance Alliance is a global finance sector led initiative which seeks to integrate natural capital considerations into financial products and services, and to work towards their inclusion in financial accounting, disclosure and reporting with 40 financial institutions including Citi, National Australia Bank and Standard Chartered.

Accounting for natural capital helps to inform decisions, and puts information in a language that decision makers understand.

The Scottish Wildlife Trust is a Scottish registered charity (charity number SC005792). It is also a company limited by guarantee and registered in Scotland (registered number SC040247), having its registered office at Harbourside House, 110 Commercial Street, Edinburgh EH6 6NF.